Bitcoin Surges Ahead as Strategy Lags
MicroStrategy (MSTR), a pioneer in corporate Bitcoin treasury strategies, is experiencing a divergence from Bitcoin’s price performance. While Bitcoin has surged approximately 13% to near $110,000, MSTR shares have declined by 3%, trading around $372. This gap, widening since mid-May, raises concerns about market sentiment towards the company.
A key factor contributing to this divergence is the increasing number of public companies adopting similar Bitcoin strategies. Over 113 public companies globally now hold Bitcoin on their balance sheets, an increase of 11 in the past 30 days. This surge in adoption is eroding MicroStrategy’s early-mover advantage and compressing its market premium.
MicroStrategy’s multiple to net asset value (mNAV), a metric reflecting the market’s valuation of the company relative to its Bitcoin holdings, has fallen to 1.80, one of its lowest points this year. This is calculated by dividing the enterprise value (EV)— encompassing market cap, convertible debt, preferred shares (STRK and STRF), minus cash—by the market value of its Bitcoin holdings. A lower mNAV limits MicroStrategy’s ability to issue new equity without significant dilution. However, it remains above 1x, providing some flexibility.
MicroStrategy’s recent purchase of 4,020 Bitcoin for $427 million, its smallest since May 5th, signals a shift in its funding strategy. The acquisition was financed through a combination of common stock (81.7%), preferred securities STRK (15.9%), and STRF (2.4%), according to analyst Ben Werkman. This diversification, leveraging its at-the-market (ATM) offering, suggests a strategic move to mitigate shareholder dilution and optimize capital raising within the current compressed mNAV environment. The company’s total Bitcoin holdings now exceed 580,000 BTC.
